Of Interest

Saturday, January 28, 2012

Japan recently made waves with the news that its total debt would hit north of one quadrillion yen over the next several months: a number greater than the GDP of the entire Eurozone. Yet the one saving grace for Japan has long been the strawman that the bulk of its debt is locally held, and thus the risk of a sharp sell off is minimal as the capital has to be recycled within the borders of Japan, especially as the USA and soon the rest of the world will provide the same returns on debt as Japan, which has been locked in a 30 year deleveraging cycle, does. However, one thing that continues to be widely ignored is the demographic top that Japanese society is experiencing as ever more workers enter retirement, and there is no replenishment of young workers (perhaps Spain can export some of its youth to Tokyo?). This may change soon because as the AP reports, the Japanese population will be cut by 30% by 2060. Furthermore the country's workforce of people aged 15 to 65 will shrink to half the population (a BLS wet dream as under those conditions the US unemployment rate would be very negative). Alas, the prospect of Japan's population of 128 million dropping by 1 million every year over the coming decades, should be sufficiently sobering. This naturally means that any existing paper supply-demand equilibrium will soon have to start being reevaluated. But by 2060 we will likely have bigger problems than placing the 1 billion googol in JJBs that have to find a buyer to fund the country's deficit. Lastly, we would love to see one of those charts showing how many working people will have to fund each and every retiree by the year 2060, first in Japan, and then in every other country.

Japan’s population of 128 million will shrink by one-third and seniors will account for 40 percent of people by 2060, placing a greater burden on a smaller working-age population to support the social security and tax systems.

The grim estimate of how rapid aging will shrink Japan’s population was released Monday by the Health and Welfare Ministry.

In year 2060, Japan will have 87 million people. The number of people 65 or older will nearly double to 40 percent, while the national work force of people between ages 15 and 65 will shrink to about half of the total population, according to the estimate, made by the National Institute of Population and Social Security Research.

Nowhere will the demographic crunch courtesy of the welfare state hit the world faste than in Japan, where the natural growth rate has been negative for quite some time:

The institute says Japan has been the world’s fastest aging country, and with its birthrate among the lowest, its population decline would be among the deepest globally in coming decades.

Experts say that Japan’s population will keep losing 1 million every year in coming decades and the country urgently needs to overhaul its social security and tax system to reflect the demographic shift.

The implication is that every single aspect of financial life will need a complete overhaul as existing assumptions have to be scrapped and entirely redone.

“Pension programs, employment and labor policy and social security system in this country is not designed to reflect such rapidly progressing population decline or aging,” Noriko Tsuya, a demography expert at Keio University, said on public broadcaster NHK. “The government needs to urgently revise the system and implement new measures based on the estimate.”

Fear not though. As pointed out previously, by 2060 the word sustainable will appear at least once in ever sentence, on its way to dominating the English language entirely another 50 years later... Zero Hedge.

Comments....

Jason T

Robots will support the seniors by then. Bullish on Robots.

Mon, 01/30/2012 - 13:59 | 2110385

Ahmeexnal

Fukushima effects on the Japanese population will probably halve the population during the next 3 years.

Mon, 01/30/2012 - 14:01 | 2110392

resurger

Spot on! I go with the guy on top, Super Bullish on Robo!

Mon, 01/30/2012 - 14:06 | 2110401

economics1996

The biggest boner killer ever created-socialism.

Mon, 01/30/2012 - 14:14 | 2110424

Badabing

Radiation 101

Mon, 01/30/2012 - 14:40 | 2110515

Sudden Debt

I could also be that we'll get 200 feet long Japanese granny's who can lift 20 containers and throw them to europe without any effort cutting down transportation costs to a minimum which could make them THE MOST EFFICIENT TRANSPORTERS ON THE WORLD!!!

Mon, 01/30/2012 - 18:45 | 2111245

mkkby

How will this be spun as bullish for housing and stocks?

Mon, 01/30/2012 - 14:19 | 2110406

TruthInSunshine

The Japanese Main & Lame Ass Stream Media (like all other propaganda proxies that we have here in the west) was told to go with this fiction, just like Ahmeexnal said above, to offer an alternate explanation as to why the Japanese population will shrink by 33% over the next several decades.

In the meantime, Fukushima Daiichi still throws off massive amounts of reproductive organ harming radioactive isotopes, into the ground water, soil, air and sea, and will for far longer than a few decades.

p.s. - Yay, alogbots! Turn another red day green by close. I love the smell of the most manipulated U.S. equity markets in the history of the great Ponzi, and I plan on buying Facebook ASAP, especially given its 100 billion est market valuation, on gross revenue of an alleged 4 billion, and actual profits of anywhere from an alleged 220 million to a -xxxmilion (or maybe -xxxbillion?). Yayyyy.

Oracle of Kypseli

Japanese pensions are being cut every year and the medical insurance copay keeps increasing every year. Eventually, there will be parity. The number of homeless loitering the banks of the canals in Tokyo Bay, increases exponentially. They are very visible as all the makeshift tents are covered with light blue TARPS (no pun intended)

Most foreign workers Philipino and Chinese have no papers and pay ver little tax.

BTW: There are more Chinese immigrants who filed as being cooks (the only profession in need) as there are restaurants in Tokyo.

Similar to more wine and pate de foie gras produced in France than all the goose livers and all the grapes in France were made into pate and wine. Go figure!

All these reports on what is going to be happening 48 frickin years from now? Gee, no shit, most folks currently 35 or older will be dead, big fuckin news flash. They should be worried about what is going to happen in the next 48 weeks or less, imo.

Mon, 01/30/2012 - 15:00 | 2110588

seek

The two are far more closely connected that it initially appears.

Many of the structural issues in the developed economies are tied to these demographic shifts -- it's the whole reason the ponzi is collapsing. Remember the key to the ponzi is to have more victims entering than leaving, and once that reverses, the collapse comes. That's exactly what's happening here.

More deeply interesting to me is that a few years ago it was (correctly, I might add) pointed out that the largest wealth transfer in the history of the world would be happening as the boomers died off, leaving inheritance to their offspring, which are much smaller in number. So in theory the US was going to have a flood of wealthy Gen X'ers.

Funny that the economical collapse that somehow transfers wealth to the banks and governments through fiat dilution would happen just as early wave of this wealth transfer was about to hit.

Mon,

AnAnonymous

If US citizenism was based on the number of people goingin, going out, it would not be that a biggie.

You know, when US citizenism brought a first version of Ponzi to the end, the one that was pushed up during19th century, more people were in than out.

Thinking in terms of people well, nice...

US world order.

Mon, 01/30/2012 - 16:20 | 2110910

akak

And the gostak distims the doshes!

It is the duty of every good dosh to support Gostak Distimism.

Mon, 01/30/2012 - 22:52 | 2111794

StychoKiller

"Just sitting musing... the virtues of cruising...

With altitude dropping...my ears started popping!"

Mon, 01/30/2012 - 15:04 | 2110610

Whiner

Oh Chubby! Where is your long term perspectiveg and love of humanity?

Stop and think of those who came over on the May Flower. They are the reason you can sit on your fat ass and trade like a monkey, actually making a good living without planting crops. Now consider those poor Japanese, what they did for the Chinese and in the end, their own people during WWll. See there, sins are generational. Economics is also a moral system. Think of the puzzled looks when retirement/welfare beauracrats tell savers and retiree's that there is nothing in their account except unmarketable JBs. Harri-karri or Bonzi. Now, go to the fridge, repent and have a beer. It's almost, cocktail hour.

Mon, 01/30/2012 - 15:05 | 2110609

BLOTTO

Ahm & Truth...

Former NSA analyst, Jim Stone, argues that there was no mag 9.0 earthquake. The tsunami was caused by nuclear bombs in the sea and the Fukushima explosion and meltdown was caused by mini-nukes hidden in cameras installed by an Israeli security firm. The motive: punish Japan for offering to enrich Iranian uranium and straying from Illuminati diktat. This website reserves judgment but offers this introduction by James Farganne in the spirit of free discussion.

A 9.0-magnitude earthquake is more than 100 times stronger than a 6.8. A 9.0 should have devastated everything within a 1,000-km radius. There should have been widespread urban carnage, even worse than what Kobe suffered.

Yet the Fukushima quake of 3/11/11 did not cause a single structure to collapse.

Jim Stone did more than wonder. He dug up and analyzed the Japanese seismograms. He proved there was no 9.0 quake, and no epicenter out at sea. Instead, there were three simultaneous quakes of much lesser magnitude, all of them inland.

The authorities lied about the 9.0 quake -- made it up out of whole cloth. An earthquake did not cause the tsunami. There must have been another cause.

Mon, 01/30/2012 - 15:23 | 2110685

blu Sorry. Basic physics still applies.

francis_sawyer

Thanks KAZOO (with the username "Blotto")...

I feel safe now knowing that you're there bringing the TRUTH to the surface...

Mon, 01/30/2012 - 16:00 | 2110820

BLOTTO

lol @ usernames! Solid post - good contribution.

Mon, 01/30/2012 - 20:00 | 2111405

smiler03

Blotto - Definition

"Slang unconscious, esp through drunkenness"

Mon, 01/30/2012 - 20:51 | 2111531

Vlad Tepid

Where to start? OK, here - the reason there was no "widespread urban carnage" was because Tohoku is as rural as you can get in Japan. There was no "urban" to be wiped out. Those YouTube clips you linked clearly show farmhouses a hundred miles away from any epicenter, wait, sorry - underwater nuclear bomb. Kobe is one of the most densely populated conurbations in the world and Osaka, which blends indistinguishably with Kobe only had shattered housewares. I don't know where you're getting this idea that a 9.0 quake in the ocean is supposed to look like an asteriod strike for hundreds of miles, but I think you should enroll in a community college geology class before returning to post on this topic.

The foreshocks and aftershocks were caused by.....? Even mini-er nukes implanted in bumble bees? Singing whales? I would have said plate tectonics but you ruled that out. But I'm glad that you have your consipracy theories. We wouldn't want Japan to enrich any nuclear material for Iran that half a dozen other countries volunteered to process too but, magically and coincidentally, were not hit with a 9.0 earthquake.

akak

You are forgetting about HAARP, as well as the secret Nazi UFO base in Antarctica, whence scalar beam weapons are shot directly through the earth to disrupt the earth's crust at any point of their choosing. I read it once on the internets, so it must be true!

Mon, 01/30/2012 - 22:11 | 2111719

Vlad Tepid

*smacks forehead*

You're right akak. I get so charged when these voodoo conspiracies surface I forget to include their whole, comical breadth. I admit that I also left off the Pat Robertsonian explanation of Japan being divinely punished for crucifying Christian samurai. My apologies to the Hedge.

Mon, 01/30/2012 - 22:33 | 2111762

akak

Well, I'll refrain from impaling you for your transgressions ... this time.

Tue, 01/31/2012 - 02:38 | 2112041

Hobbleknee

Agreed. The real conspiracy is why they're in no hurry to contain the disaster.

Mon, 01/30/2012 - 17:12 | 2111079

karzai_luver

Da BIG ONE Tokyo within 4 years.

GET OUT!

Tue, 01/31/2012 - 06:26 | 2112159

old naughty

not to diminish the effect of the medical bills on the remaining populace (or "effect" of remaining populace on medical needs)?

And they still project 70+millions in 2060?

As more news rise, immigration applicants declines.

All numbers, ONLY. Sad.

Mon, 01/30/2012 - 14:28 | 2110470

walküre

Robots are infinitely better than human labor. We just need to figure out a way to sell credit to these non-carbon based workers and get them leveraged. Robots are currently living like slaves. They want houses too! Give each robot a mortgage to buy a foreclosed house and solve that real estate overhang problem. Of course robots will want to drive cars, perferably the Chevy Volts or such. Then they like streaming online movies from NFLX and cram their iron bodies into LULU wear!

WIN WIN WIN!!!!!

Who needs people to drive an economy anymore! Robots replaced people at pretty much everything else so why not go alllllllllll the way!!!!!????

Matt

"We just need to figure out a way to sell credit to these non-carbon based workers and get them leveraged."

That's where this whole panic-attack dies in it's tracks. The Japanese will easily make the decision to die in xenophobic penury and default than let outsiders in. And I can't say I blame them - they've kept a pretty tidy ship all by themselves.

This whole demographic "time-bomb" is all smoke as far as I'm concerned. They'll go on as they do until it doesn't work and then they'll suffer a catastrophic default and huge crunch on living standards as imports become hard to finance for a few years and then back to good old industrious Japan, minus tens of millions of since-passed-on pensioners. Age and time solves ALL demographic crunches.

I think you're confusing Roppongi with Subic Bay. Japanese girls in Roppongi don't give a shit about American guys - they're only looking at the size of the wallet and the next sugar daddy of ANY stripe.

The Obama administration along with other "progressive" governments have already declared the "Fukishima Affect" in play to address the global debt issue over the next decade. Reduce the world population and increase the needs of those remaining...

I always lend little credence to projections that talk about "XYZ will be this by 2030 or 2060". Interesting article as always, but I find linear thinking to often be... well... linear. Too many variables can influence the numbers in a 50 year span.

Consider the fact that the Internet as we use it today only exists since 1996 (15 years), yet you are predicting the state of Japan 49 years into the future based on a linear model. Given the fact that our own economy (together with the worlds) is projected by many on Zero Hedge to go down substantially within the next 1-3 years, what is the point of even talking about anything further out than even 10 years?

"Given the fact that our own economy (together with the worlds) is projected by many on Zero Hedge to go down substantially within the next 1-3 years, what is the point of even talking about anything further out than even 10 years?"

That's ok.... I'm sure the Japanese will be over their xenophobia by then...

Heck, they might even be willing to import Chinese labor by then; and what honest, work loving Chinaman wouldn't be thrilled to death to relocate to Japan and see the value of his labor surrendered to paying ever increasing Japanese income tax rates...?

I'm so excited about the prospect of the Chinese labor takeover of Japan that I'm buying my ticket to Tokyo so I can start my "skilled chinese labor" recruiting company right now...

But, the real money will be in the importation of Chinese hookers, since no self-loathing Japanese whore would dare to let herself be filmed on the Internet receiving a bukkake from a bunch of "sick men of Asia"...

The Dude: Walter, the chinaman who peed on my rug, I can't go give him a bill, so what the fuck are you talking about?

Walter Sobchak: What the fuck are you talking about? The chinaman is not the issue here, Dude. I'm talking about drawing a line in the sand, Dude. Across this line, you DO NOT... Also, Dude, chinaman is not the preferred nomenclature. Asian-American, please.

The Dude: Walter, this isn't a guy who built the railroads here. This is a guy...

Are you assuming that Chinese laborers do not age? Or are you simply looking forward to them being worked to death? Because at the rate of pay they receive, they sure as hell won't be able to save enough money to live on once they get too old to work to survive without assistance.

Often times, comments and articles about the problem with funding retirees are found on ZH. What I never do find though is any suggestion of what should be done about said retirees. (perhaps it has been mentioned and I missed it or am forgetting)

So what would the posters here suggest? What should be done with people who have worked all their life and now, no longer able to work, cannot survive without assistance? Or the pension that was guaranteed (or at least promised them)?

So far I've received exactly the the type of replies I suspected I'd get: all snark, no substance.

It's easy to talk about tossing these people off to the side, call them "unproductive units" (does "Brave New World" ring a bell?)...but when you put a face to it, a name (your parents? grandparents?)...are they so easy to disregard? We're talking about people, not toasters.

Elderly people will do what they did for the thousands of years before there was a nanny-state retirement system. They will work for themselves as best they can. It's not some horror. It's how life has always been up until a few decades ago. Actually the last few decades are the abberation -- ponzi financing for a false utopia.

Families may return to "old-fashioned" multigenerational living arrangements. Imagine that! Living with more people than just your spouse and kid(s). What ever will we do if we don't have our 3,500 square foot houses occupied by all of 2-to-4 people! We might even have to talk to each other at dinner! The horror!

My uncle and aunt have been doing this with her parents (who are from China) in a 2 bedroom apartment with their baby for the past few months. Free daycare and babysitting, live-in maid and chef services ... my apologies fellow Amerifats but it doesn't sound that bad.

When what is historically abnormal has been normal for "so long", mean-reversion will indeed seem strange to those who aren't paying attention.

Under population is the easiest thing in the world to solve. Firstly, controlled immigration could bring in just the right demographic, and talent pool. And, if the population does shrink noticeably, the quality of life would improve as over crowding is relieved. With a higher quality of life comes higher birth rates.

It would, but peak oil and many other resources will be kicking in as well. Food will be more expensive as the inputs get more scarce. The entire world will experience population decline because of that. But Japan adapt to that earlier than everyone else in the developed world, so they should be okay.

AnAnonymous

More land, more resources, more open space, less pollution.

///////////////////////////////////////////////////

Sure, sure, back to the gold old times of 1492...

Uh, ah no, US citizens have lived between that year and 2012, guzzling more resources in fifty years than the rest of humanity since dawn of time to 1950.

(Apparently, some of you flyby, quick-draw posters here do not know of the trollish posting history of AnonymousAsshole and his strident, repugnant, bigoted anti-Americanism, nor have any sense of sarcasm, irony and humor ---- all of which I am trying to express by rephrasing his absurd and bigoted remarks, and turning them back at him in return. But thanks for shitting in the punchbowl.)

A falling population is a wonderful thing. Less infrastructure to build, a higher standard of living, employers forced to compete for labor, less unrest, lowered environmental demands, more emphasis on productivity instead of driving labor costs down, fewer prisoners, cheaper homes, easier commutes, greener living, and less crowding.

Now consider California. Millions of immigrants crowd in here every year. It's more and more expensive to live here, commutes are getting worse, crime is staggering, welfare & social unrest is exploding, natural resources are running out, infrastructure cannot keep up with demands, the education system is overtaxed, and freedoms are being lost.

Stuck on Zero, Yes, California is a great model of what overpopulation can do. I spent some time in San Diego back in the 70s when I was in the Navy, saw a lot of the southern California area in that time. You are right!

It was easy to get around even up in LA. Lots of open space, uncrowded beaches. You name it, this was heaven on earth out there at that time.

I was there not too many years ago. My goodness what a hell hole parts of it have grown into. Driving in LA?! Dangerous neighborhoods?

When I lived out there, we knew all our neighbors they were working middle class people. We partied togther, had dinner together. We watched out for each others kids and homes. It was a community built on trust!

I can only imagine what those neighborhoods are like now. Overpopulation and mass illegal immigration what's it good for????

I've been saying what you and Stuck on Zero are saying here for almost a year now vis-a-vis Japan...I am pleased to see that these ideas are getting fewer junks and more green arrows. Underpopulation will never be a problem in a country with less than 15% arable land, a high tech industrial base and an educated workforce. Japan is the ONLY country to my knowledge to have resisted the Pyrrhic victory of "Growth through Third World Invitation," and they will be rewarded in the future by CONTINUING TO EXIST.

To be honest I thought opinion was turning decidedly in our favor and then Tyler posts this - like a smaller population is a bad thing in Japan. Debts are a fiction of the fractional reserve existence that dominates modern financial reality. What really exists is a hard working populace, business and industrial knowhow, a culture that values hard work and community and all the industrial capital residual of 100 years of an industrial economy.

In the present day drawn by Chinese citizenism, hirers won't have to pay employees, employers merely lock up employees in sweat shops under serf-like, quasi-slavery conditions, from which some are impelled to commit suicide to escape. Such is the eternal nature of Chinese Citizenism.

Short and sweet. Any economic system that requires constant population growth is a PONZI scheme. Look at China and India! Anyone want to trade places with them? If population growth is always a good, then somebody needs to explain those two hell holes, or as I call them, ant hills!

These clueless, short-term-obsessed economists who blindly declare that we MUST have a growing population --- to have continued economic "growth" (read: metastasis), or to fuel the pension Ponzi scheme, or for whatever other dubious and spurious reason, always make me laugh. When will the earth finally have ENOUGH population---- 20 billion? 40 Billion? 100 billion? 1000 billion? When the entire surface of the earth is like downtown Tokyo, or Mexico City, or Calcutta? THEN what?

Except you are so fat, ugly and stupid from day dreaming inside a computer game for 40 years, no Japanese woman will ever go near you. And being a virgin for that long, you don't even know how to talk to a woman without breaking into a flop sweat.

I think these are modest estimates. The Fukushima straw man will make the remaining folks effectively sterile thereby hastening the demographic decline. I consider Japan to be the single worst place in the world to bug out to.

1. Trapped on an earthquake prone island with a giant nuclear meltdown in the middle of it.

2. A nuclear armed China who inherently hate the Japanese.

3. A midget with nukes in N. Korea.

4. A US military that will be pulling out of Japan once the loss of USD world hedgemony is complete.

Rumour has it, we are looking into building a large long-term nuclear waste holding facility, and then we can charge the Americans for storing their waste with us. Payment in gold, of course, as we need payment that will still be good for the employees working at the site 10,000 years later. Multi-Generational employment opportunity FTW!

Ageing nuclear infrastructures... I wonder how US citizens could use that to blackmail their neighbourhood.

After all, radiation wont stop at borders...

Nor do the rampantly high levels of Chinese pollution and environmental degradation which are currently, and increasingly, spilling over their borders, leading to Chinese dust storms in Korea and even Japan, and high levels of environmental lead and mercury as far as the Arctic and northwestern North America. But in their zeal to pollute the earth and destroy the environment, as well as in their raping of Tibet and brutal suppression of free speech, we see the eternal nature of Chinese citizenism.

Ah yes. And because your little narcissistic world is all you really know, then everyone else in the future should be banished to make more room for you. Here's an idea. Why don't you take a trip to Wyoming. Bring a sleeping bag and a tent. You wouldn't last a single night you stupid metrosexual fuck.

The Japanese should do just like Spain: bring 8 million Moroccans, Senegalese, and Roma and then let the wonders of diversity fall in: plenty of jobs will be created in the value-added, R&D-intensive fields of home security, social work and ethnic hairdressing.

Japan has been living with 0 to negative growth for the last 20 years. The population knows what this means to them and the trust in government and banks is non existent at this point. We on the other hand have a long way to go to understand what has been inflicted upon us. Western countries are just now beginning to wake up to the fact that the end of the fantasy is near.

As mentioned, the reason Japan's interest rates don't reflect 200% debt/gdp is because external debt is very low, and you can't default on yourself. So long as Japan can keep selling bonds to Japan Post bank there is nothing to worry about.

But as demographics shift, at some point domestic savings will be insufficient to cover government deficits and Japan will have to go offshore for bond buyers.

They already figured it out, gold-backed bonds. All they need to do is issue enough of them with low enough yield that they can finance operations, and still have enough left over to import more gold, and they can keep it going for at least two more decades.

Hmmmmm.... massive social ponzi schemes suck the life out of populations? I seem to recall Japan has a staggering abortion rate. I seem to recall someone who worked in a hospital there who said they could barely keep up with demand.